successful entrepreneurship - Kellogg School of Management

successful entrepreneurship - Kellogg School of Management

Course Outline and Syllabus For SUCCESSFUL ENTREPRENEURSHIP ENTR-463-0 Section 81 Spring 2008 Class Professor Lloyd E. Shefsky LES/dl Revised 03/14...

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Course Outline and Syllabus For

SUCCESSFUL ENTREPRENEURSHIP ENTR-463-0 Section 81 Spring 2008 Class

Professor Lloyd E. Shefsky

LES/dl Revised 03/14/2008

GUEST SPEAKERS In the past, I have been able to prevail on my network to attract some high profile, attractive guests (see list below) whose perspectives expanded those of the class members. Some of these and other similar guests will attend this year. Howard Schultz – CEO and Founder, Starbucks; Author, Pour Your Heart Into It. James Covert – Former CEO, SecurityLink; Founder, Signature Security (8th largest IRR in V.C. history). Jim Sinegal – Co-Founder, President, CEO & Director, Costco Jack Greenberg – CEO, McDonald’s Corporation. David Orek – Founder & CEO, Oreck Corporation Pleasant Rowland – Founder, American Girl (sold for $750 million); former Vice-Chairman, Mattel Inc. George Fisher – Former CEO, Kodak (guided company into digital & China) and Motorola (guided company into cell phone dominance). John Osher – Founder, Dr. John’s Spinbrush (sold to Proctor and Gamble, now “Crest Spinbrush”, Cap Toys (sold to Hasbroy Toys); Founder, Con-Serv Inc. (Sold to Gerber Foods); Founder, Saybrook Industries (“Dish Doctor Power Scrubber”). Bernee Strom – Founding CEO, PriceLine.com; Founder, Gemstar (created VCR+); Founder, MBS Tech (File Runner program); Chairman, Ensequences; CEO, Walker Digital; President, Info Space Ventrues; CEO, Strom Group; Director, Hughes Electronics, Polaroid, Krug Intl, DDL Eletronics, Software Publishing Co., etc. Allen Andersson – Founder, Light Speed International (sold to Cisco for 9 million shares); Founder, Logos Tech Lab; Founder, Expert Image Systems. Stan Kasten – CEO, Atlanta Braves, Atlanta Hawks and Atlanta Thrashers; Chairman, Phillips Arena & Turner Field; Founder of the Washington Nationals (new Major League Baseball team). Maxine Clark – Founder & CEO, Build-A-Bear. Jaye Hersh – Founder & CEO, Intuition; Founder, Baby Boxers. Michael Collins – Founder & CEO, Big Ideas Group (introducing inventors & idea-buying companies; Founder, Kid Galaxy. Ginger Graham – CEO, Amlyn Pharmaceuticals; Advisor to President, Guidant Corp.; Director, Millenium Patrick Kelly – Founder, PSS/World Medical; Author, Faster Company: Building the World’s Nuttiest, Turn-on-a-Dime, Home Grown, Billion-Dollar Business. Ed Beauvais – Founder, America West Airlines (forced into Chapter XI under his watch; later survived) and Western Pacific Airlines (bankrupt under his watch; out of business). Eli Barkat – CEO and Founder, BackWeb Technologies Ltd.; Founder, BPM (developed and financed Checkpoint Systems Inc.). Doug Becker – Founder and CEO, Sylvan Learning Centers, Inc. Coach Gary Barnett - Former coach, NU Football Team (Rose Bowl Appearance and Sky Box development); current coach CU Football Team. Jack Graham – Founder & CEO, International Catastrophe Insurance Managers (sold to Paul Allen). Jeff Aronin – Founder & CEO, Ovation Pharmaceuticals. Dan J. Carroll – Former CEO, Hoover Universal, COO, Gould Inc. and President, Management Consulting Division of Booz, Allen and Hamilton, Inc.; On Boards of institutional, and entrepreneurial companies, including Holmes Protection Group, Woodhead Ind., A. M. Castle, AON Inc., Diebold, Wolverine Comshare, American Woodmark, Oshkosh Truck, Recombinant Bio Catalysis, PCubed, etc. Theodore Pincus – Founder and former CEO, Financial Planning Board (top PR firm to hundreds of entrepreneurs and their companies); selected by PR Week as one of the 100 most influential PR industry leaders of the 20th Century. David Kronfeld – Founder and CEO, JK&B Capital (highly successful Chicago Venture Capital firm.) Rebecca Smith – Founder and CEO, A.D. Morgan (Construction Company). Gila Bronner – Founder and CEO, The Bronner Group (consultant to governmental agencies). Scott Chaikin – Founder & CEO, Closets Plus & Shutters Unlimited (sold to Masco). Olaf Isaacsen – Consultant, Managerial Behavior. Clients include: Silicon Valley Bank, Bechtel, The Kaiser Companies, Weyerhauser, Olin-American, Hewlett-Packard, Korn/Ferry Intl., Wells Fargo Bank, and U.S. and Australian Departments of Defense. Kevin Salwen - Founder & Editor, Worthwhile Magazine

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GOAL OF COURSE Entrepreneurs are the true base of our extraordinary economy and society and their importance in other countries’ economies is growing as well. While well-educated and trained managers often make important, periodic improvement in and efficient implementation of existing business models, the quantum leaps to huge value creations and the rewards that accompany such leaps generally fall to entrepreneurs not to mere managers. Not all entrepreneurs succeed, although the failure rate is often exaggerated. Many failures result from the founder’s lack of basic management skills. Since that cannot be the failing of Kellogg alumni and since something short of 100% of all Kellogg alums' entrepreneurial ventures succeed, it is clear that more than mere management skills are needed. In addition, it is clear that, in general, entrepreneurial businesses (a) build value faster, (b) create far more jobs, and (c) afford leadership opportunities to a broader segment of society than do more established, managed businesses. The course goal is to help participants, whose education as managers is par excellence, to understand how such managerial talents must be applied differently and what additional talents are required for successful entrepreneurial businesses. In other words, the goal is to teach Kellogg students how to be successful entrepreneurs. The lessons are also useful to those who deal with, represent, finance and work for entrepreneurial leaders, with whom such others must deal differently than they would with managers. For examples, see “comparisons” below. BACKGROUND & COURSE DESCRIPTION While entrepreneurial companies account for most new employment opportunities, there is little written about the peculiar traits of entrepreneurs, and much of what has been written is autobiographical with shades of selective recall. The recent speed of change in our society may account for some of that lack of texts and other good reading on this subject (i.e., an inability to compare today’s entrepreneurs with yesterday’s before tomorrow’s makes those seem irrelevant). However, by comparing entrepreneurs with concurrent managers, the essence of and the changes in the former become more apparent, comprehensible and adaptable. I have represented, worked with, interviewed and studied thousands of entrepreneurs and believe I have a special appreciation of their essence. I do not, however, pretend to be able to convert everyone into a successful entrepreneur and especially not in one course. If it were that easy, there would be no need for bankruptcy lawyers. I am convinced, however, that (i) there are lessons that help entrepreneurs be better at what they do; (ii) the talent set is in addition to that acquired in the basic business school curriculum; (iii) dealing with entrepreneurs can be facilitated by a better understanding of what those leaders are really like and why they are that way; and (iv) you can learn to apply their example to achieve your own success. COMPARISONS Perhaps it would be helpful to provide examples of comparisons of entrepreneurs and managers, which lead to a better understanding of entrepreneurs:, I.

II.

III.

Entrepreneurs use different techniques than managers to obtain financing, attract, retain and motivate employees, deal with customers and suppliers, use consultants, advisors and directors, and even communicate. Given MBA students’ intensive focus on job interviews, it is clear that they believe that compensation is an effective motivator. However, the forms and/or amounts of compensation that motivate entrepreneurs are quite unlike those that motivate managers. Managers are intent on maintaining a clean record (no failures), often foregoing opportunities for success to avoid a blemish on their resumes. Entrepreneurs, on the other hand, have no fear of failure and often wear failure as a badge of experience. This difference affects virtually every aspect of their work-life, as well as those of others involved with their business.

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IV. Managers and Entrepreneurs have many common characteristics, which each group often uses differently, as well as many distinguishing characteristics. It is important to understand these similarities and differences. It’s not that either is right or wrong. The differences are merely appropriate for the different stages of each business. In recent years, a growing number of MBA students considered the job interviewing process (and, in extreme cases, even class work) a waste of time that could have been better spent polishing their business plans and elevator presentations. The NASDAQ adjustment of 2000 may have dissuaded some from founding their own businesses right out of the gate. This course will provide lessons that will help those who choose to succeed as entrepreneurs (now, immediately after graduation, or later) where others might fail and will teach those merely considering it, as well as those who support, represent, finance, work for or compete with those movers. The course will provide valuable lessons and skill sets that help in building successful entrepreneurial businesses. Ethical entrepreneurship had been part of this course for nearly a decade before the public became aware of inappropriate behavior at Enron, Andersen, Merrill Lynch, etc. Not only is “ethical entrepreneurship” not the oxymoron that many people believe, the entrepreneur’s ethical behavior is actually a prerequisite to success. Despite recent examples to the contrary, following laws applicable to business is not hard to do. Of course, talented lawyers can help guide your behavior but often they squelch entrepreneurial drive. Understanding how ethical rules are different (and are applied differently by entrepreneurs and managers) is critical and can enable you to conduct yourself ethically while aggressively pursuing your entrepreneurial dram. That alone can make the difference between success and failure. The impact of occurrences surrounding Enron, Global Crossing, Arthur Anderson, & Co. etc., will also be explored, to teach you how to spot warning signs, how to obey those signs without sacrificing entrepreneurial spirit, and how to convert temptation to advantages. WHO SHOULD TAKE THE COURSE Anyone who thinks he/she may (now, soon, later, or whenever): Become an entrepreneur; Work for an entrepreneur; Finance an entrepreneur; Supply an entrepreneur; Consult to an entrepreneur; Serve as a Director of an entrepreneur’s company; Joint Venture or Align with an entrepreneur; Form or foster a new venture within a large, established organization (i.e. intrapreneurship); or Manage (as CEO) an intrapreneuerial venture.

COURSE ELEMENTS „ Lap-tops will not be permitted during class. Class Readings There is no textbook for this course. Instead, I have selected materials that I believe are more relevant to successful entrepreneurs and this course. The Case Packet is available and includes most of the class readings. I have kept the reading assignments relatively light, with the exception of the preparations for the first two classes, where the readings include several pieces related to the nature of entrepreneurship and entrepreneurs (a foundation of the course). That includes my book Entrepreneurs Are Made Not Born. Lest anyone question my 4

ethics or purpose, I have arranged, at my own expense, for hardcover copies to be available to my students FREE (list price $21.95). As soon as you have registered for this course, see my assistant, Dana Levit-Geraci, in Room 5228 to obtain your free copy. Additional items may be distributed and/or added to the syllabus from time to time (especially before the start of the spring quarter). Participants will also be expected to do independent research/reading on Guests (see below). One of the assignments in this course is to watch the movie "Tucker: The Man and his Dream" (released in 1988 with a run time of 111 minutes, directed by Francis Ford Coppola and produced by George Lucas, with lead actors Jeff Bridges, Martin Landau, Frederic Forrest, and Joan Allen). It is the story of Preston Tucker, the man who revolutionized car design in the late 1940s, only to have his innovation squelched by the "big three" automakers in a battle between Tucker and powerful political lobbies. There are many lessons to be learned from this movie - - lessons that can help you become successful entrepreneurs. We will be discussing this movie in class, on Monday, April 21, 2008, so I encourage you to watch it. You can borrow it at the NU Main Library, where 2 copies of the DVD have been placed on reserve or you can obtain it from Amazon.com for $12.99 or NetFlix (unfortunately Blockbuster no longer keeps it in stock). Class Discussions The Course Outline, in combination with the assigned readings, is meant to prepare and guide participants for active/proactive, healthy/aggressive class discussions. Often there is no right or wrong position, but solid and creative thought, together with articulate, expressive and passionate presentations and discourses, are prerequisites to a good grade, much as it is to successful entrepreneurship. While class readings and discussion topics are separated by sessions, the use of class time for guest presentations and discussions inevitably results in subject matters in this syllabus being continued or completed in the succeeding session(s). That is one of the reasons for only 9 Sessions being listed in this outline. There will be 10 sessions, but the 10th session will consist of (a) some catch-up; (b) an overview, bringing together the material and subjects covered in the first nine sessions; and (c) open Q & A relating to participants’ personal plans and situations (see also Availability below). Written Assignments Each participant will participate in two written assignments. Both will be individual, and not a team effort; and the latter will be the final paper. The earlier assignment will be due before the fifth class; it will be distributed by the third class. Guest Speakers Class members are expected to prepare for guests’ appearances by reading all assigned material, by doing appropriate independent research (in this day & age, no one should go into a meeting with a stranger without checking them on Google or a similar site) before class, and by asking well thought out and well prepared, intelligent, perceptive, probing, politely-aggressive questions on subjects material and relevant to each guest’s business experience and to the class outline. Such questions should be asked voluntarily; failing that, class members will be called upon to ask questions. So that guest speakers will feel sufficiently comfortable to be open and candid, thus maximizing the benefit to the entire class, they are informed that their words will be treated as confidential. Therefore, it is a prerequisite to selecting this course that each class member agree to treat the guests' words as CONFIDENTIAL. FAILURE to do so will be deemed a VIOLATION of the KELLOGG HONOR CODE.

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Grades In addition to the above participants’ obligations and responsibilities, there are two others. Participants must make their course performance both (i) high quality contributions to the learning process, and (ii) known and memorable to me (for example, each participant shall occupy the same seat at every session; nameplate cards should be used at every session of the course; and other tasteful tools to spur recollection of participants’ identities and accomplishments in class are encouraged). Questions and answers should reflect qualitative thought and reading of material, rather than mere attempts to rack up “air time.” (Nothing here or elsewhere is intended to discourage sincere questions, in or out of class, where the material, lecture discussions, etc. are unclear or simply not understood.) Grades will be based on all Course Elements and will be allocated approximately1 as follows: Class Discussion Guest Speakers (Questions)

15% 10%

Written Assignments: Interim Final

15% 60%

If participants must be absent, they should send an email to Professor Shefsky with a cc: to Dana Levit-Geraci. Frequent tardiness or absences, which deprive the class of important participation, will be noted. Availability Participants can arrange appointments to meet with me through my assistant, Dana Levit-Geraci, (847-4677855) [email protected] I am generally available on Mondays but can be available at other times (and even at my downtown Chicago office) if necessary for individual meetings with my students, and to discuss the class, assignments, participant progress, entrepreneurship, entrepreneurial leadership, etc., as well as issues or matters relating to my students’ existing or planned entrepreneurial ventures. Help With Your Business Over the past several years, a number of my students have accepted my offer to talk with and help them with their entrepreneurial ventures during the quarter. Some of these have resulted in valuable introductions leading to investment, customers, joint ventures, purchases of the business, etc., in addition to advice regarding structures, appropriate models and strategies. Again this Spring Quarter I will be available to help my students in that same way, and I encourage you to take advantage of this free personal advice. All I seek in return is your commitment that should you ever “make it” financially, you will remember the Kellogg School in some meaningful, tangible way. Class Schedule (All classes begin promptly and meet from 6:30 pm to 9:30 pm) Class #01 - Monday, March 31, 2008 Class #02 - Monday, April 07, 2008 Class #03 - Monday, April 14, 2008 Class #04 - Monday, April 21, 2008 Class #05 - Monday, April 28, 2008 Class #06 - Monday, May 05, 2008 Class #07 - Monday, May 12, 2008 Class #08 - Friday, May 16, 2008 (Make-up day for Memorial Day) Class #09 - Monday, May 19, 2008 Class #10 - Monday, June 2, 2008 1

In grading, as in entrepreneurship, there must be an appreciation of and tolerance for ambiguity and a high degree of trust.

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Topic I

Nature of Entrepreneurs & How They Get Started

A. Outline 1. What is entrepreneurship? 2. How do Successful Entrepreneurs get an Entrepreneurial idea? 3. How do Successful Entrepreneurs convert their ideas into an Entrepreneurial Dream? 4. How do Successful Entrepreneurs validate their Entrepreneurial Dreams? 5. What is “Creative Destruction,” Joseph Schumpeter? 6. How do Successful Entrepreneurs convert their Dreams into successful businesses? 7. How to entrepreneurs develop business models? 8. What barriers may prevent you from being a Successful Entrepreneur? 9. Should you be stubborn to be a Successful Entrepreneur? 10. Should you have unbridled optimism to be a Successful Entrepreneur and how do you get it? 11. What is the impact of an entrepreneur's Risk Willingness on his/her followers (Fear of Failure)? 12. What is the nature of an entrepreneur’s devotion and time commitment and what are their impact on his/her followers? 13. Are all founders of businesses entrepreneurs? 14. Can a Non-Founder be an entrepreneur? Are Successful Entrepreneurs con artists? Who do they con (others? self?)? 15. How do Successful Entrepreneurs' functions differ from managers' as to starting and building their businesses? B. Syllabus Read1: ƒ Shefsky, Lloyd E. Entrepreneurs Are Made Not Born. McGraw Hill Co. May 1996. (See “Class Elements, Class Readings” above.) Read the following (in the Case Packet): ƒ Kamien, Morton I. "Entrepreneurship: What Is It?” Business Week Executive Briefing Service. 1994. Vol. VII, pp.1-24. ƒ Schumpeter, Joseph A. “The Process of Creative Destruction, Can Capitalism Survive?” Capitalism, Socialism, and Democracy. New York: Harper, 1975. Chapter 7, pp.81-86. ƒ Maccoby, Michael. “Narcissistic Leaders: The Incredible Pros, the Inevitable Cons.” Harvard Business Review. Jan-Feb 2000. pp. 2-10 [originally numbered 68-77]. ƒ Lovallo, Dan & Kahneman, Daniel. “Delusions of Success: How Optimism Undermines Executives’ Decisions.” Harvard Business Review. Jul. 2003. pp. 1-9 [originally numbered 56-63]. ƒ Jobs, Steve. “Stay Hungry. Stay Foolish.” Fortune. Sept. 5, 2005. pp. 31-32. ƒ Karlgaard, Rich. “It’s the Entrepreneurs, Stupid.” Forbes. Jul. 4, 2005. Vol. 176, Issue 1, p. 39. ƒ Houseberg, Denise. “No Fear.” Fortune Small Business. Jul.-Aug 2005. p. 124. ƒ Stewart, Janet Kidd. “Entrepreneurs Long On Passion, Not Patience.” Chicago Tribune. Aug. 14, 2005. Section 5, p. 6. ƒ Ryan, Liz. “The Perils of Following Your Bliss.” Businessweek. Jan. 21, 2008, Issue 4067 p. SC08. ƒ LaFay, Howard. “A Father’s Last-Chance Invention Saves His Son.” Reader’s Digest. Jan. 1957, p. 2932. ƒ Slobin, Sarah. “On the Flipside.” Fortune, Aug. 6, 2007, Vol. 156, Issue 3, p. 66. ƒ Goldstein, Buck. “Behind Every Great Entrepreneur-7 Ps.” Unknown Source, p. 1.

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This reading will impact much of the coursework. It can and should be read by the second class, although doing so by the first class will prove helpful. 7

Topic II

Exit Strategies: Transition, Succession, Oblivion [Summary of Preceding Session]

A. Outline 1. How do Successful Entrepreneurs deal with their exits: As Executives? As Directors (Chairs)? As Shareholders? 2. What are the difficulties affecting a Successful Entrepreneur's decisions regarding: Transactional Disposition of Business? Passing the Baton to a Successor? 3. And, as to each, how and why are the difficulties best handled to maximize benefits: To the Company? To the Entrepreneur? 4. When should the preparation for these processes begin? Who should be involved? How should one accomplish these tasks? Consider: The Signature Security Case Study B. Syllabus Read the following (in the Case Packet): ƒ Kuemmerle, Walter. “Signature Security: Providing Alarm Systems for the Countries Down Under.” Harvard Business School. Case N9-800-254, Sept. 24, 2001. pp. 1-24. ƒ Socha, Miles; Wisman, Katherine; Fallon, James & Conti, Samantha. “Art vs. Commerce: Is The Bottom Line What Drives The Line?” Women’s Wear Daily. Feb. 10, 2000. pp. 9-11. ƒ Mullins, John W. “Take the Money – or Run?” Harvard Business Review. Article #R0411A, Nov. 2004. pp. 1-4 [originally numbered 35-40]. ƒ Helm, Burt and McGregor, Jenna. “Howard Schultz’s Grande Challenge.” Businessweek. Jan. 21, 2008, p. 28. ƒ Helman, Christopher. “The Second Coming.” Forbes, Dec. 10, 2007, Vol. 180, Issue 12, p. 78-86. ƒ “Story – Exit Strategy.” Unknown Source, p. 1. ƒ “When Selling Their Business, Women Owners More Likely Than Men to Care What Happens After Sale.” Center for Women’s Business Research and MassMutual Financial Group, May 3, 2006, p. 2.

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Topic III

Boards [Summary of Preceding Session(s)]

A. Outline 1. When do most Entrepreneurs establish a Board of Directors for their company? 2. When should Successful Entrepreneurs establish a Board of Directors for their company? What prompts doing so? How should a Successful Entrepreneur establish it? promote it? 3. Who do most Entrepreneurs select as Directors? Are there better choices? 4. Who should Successful Entrepreneurs select as Directors? 5. What is it that makes one a good candidate for boards of entrepreneurial companies? 6. How do Successful Boards tie Entrepreneurs' (and, when necessary, other employees’) interests to the company’s interests? 7. How do most Entrepreneurs compensate Directors? 8. What should Successful Entrepreneurs expect and seek from their company’s Board? 9. How do Successful Entrepreneurs make that happen? 10. How should Successful Entrepreneurs compensate Directors? 11. What are pitfalls? risks? penalties/losses? 12. How do Boards' relationships with Successful Entrepreneurs differ from Boards' relationships with non-entrepreneur CEO’s (e.g., Sarbanes Oxley)? 13. When and how are Successful Entrepreneurs likely to get hurt by their company’s Board? 14. How can such problems be prevented and cured? 15. What are the actual and likely implications to Successful Entrepreneurs of recently publicized board problems and new laws (e.g., Sarbanes Oxley)? 16. What are the Successful Entrepreneur's obligations to shareholders (public and private) and how should they be fulfilled? B. Syllabus Read the following (in the Case Packet): ƒ Shefsky, Lloyd E. and Gruber, Misty S. "Prospectus Perspective: Private Deliberations About Going Public." Shefsky & Froelich, Ltd. 1992. pp. 1-12. ƒ Barrett, Amy. “How To Keep Rising Stars From Straying.” BusinessWeek. Jun. 7, 1999. p. 80. ƒ Cunningham, Cara. “Board Games.” Red Herring. Oct. 30, 2000. pp. 206-217. ƒ Garber, Ross. “Entrepreneur in Residence: Board Management Made Easy.” Red Herring. Jul. 2000. p. 390. ƒ Byrne, John A. “Boards Share the Blame When the Boss Fails.” BusinessWeek. Dec. 27, 1999. p. 58. ƒ Fraser, Jill Andresky. “Building the Board.” Inc. Magazine. Nov. 1999. pp. 131-133. ƒ Balachandran, Bala. “Be A Better Human Being, A Better Manager.” Kellogg Spotlight. Dec, 24, 1988. p. 1. ƒ Countryman, Andrew. “Special Report: CEO Compensation: Sidebar: Director’s Compensation, Workload Rise.” Chicago Tribune, Jul. 15, 2007. ƒ Finn, Laura J. “Companies That Pay Their Directors $1 Million A Year.” Corporate Board Member Magazine, Jan./Feb. 2008, pp. 14-15.

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Topic IV

Incentives and Motivators (Compensation & Others) [Summary of Preceding Session(s)]

A. Outline Incentives and Motivators (Compensation, etc.) 1. How do Successful Entrepreneurs attract and retain employees? a. Personal Leadership Qualities b. Teams c. Business plans and models d. Compensation (salaries, bonuses, stock and options, perks, severance packages, etc.) e. I would follow him anywhere – v. – I picked the right horse f. Piece of Rock (unlike Prudential) g. Sharing the wealth and the Ownership of the Dream h. Consider Comdisco executives (as proxies for suppliers of goods or services paid at least partially with equity opportunities). i. Reviews and compliments 2. What compensation/motivation packages do Successful Entrepreneurs seek for themselves and when? How do such packages relate to motivating entrepreneurs? 3. Who determines Successful Entrepreneurs' compensation? 4. How does compensation of Successful Entrepreneurs differ from compensation of Successful NonEntrepreneur Executives? 5. What kinds of people do Successful Entrepreneurs hire? B. Syllabus Read the following (in the Case Packet): ƒ Strauss, Robert S. “How to Divide the Stock Pile: The Ways and Means of Structuring Options Plans.” Red Herring. Dec. 19, 2000. pp. 1-3 [originally numbered 102-106]. ƒ Jones, Sandra. “Comdisco: It’s Make or Break Up.” Crain’s Chicago Business. Jan. 15, 2001. pp. 1-2. ƒ Jones, Sandra. “Comdisco Clean-Up Chief Gets Mussed as Enron Mud Flies.” Crain’s Chicago Business. Jan. 21, 2002. pp. 1-2. ƒ Jones, Sandra. “The Crash of Comdisco.” Crain’s Chicago Business. Jan. 5, 2002. pp. 1-9. ƒ Gordon, Joanne. “Greek Tragedy: Nicholas Pontikes Oversaw the Swift Demise of His Dad’s 30Year-Old Computer Leasing Firm.” Forbes. Jun. 11, 2001. pp. 1-2. ƒ Johnson, Julie. “Comdisco Execs Fight Settlement.” Crain’s Chicago Business. Dec. 6, 2004. pp. 1-2. ƒ “Are Large CEO Severance Packages Justified?” Kellogg Insight (Focus on Research), Sept. 2007.

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Topic V

Entrepreneurial Communication & Marketing Skills [Summary of Preceding Session(s)]

A. Outline 1. Successful entrepreneurs need unique communications skills To attract resources To articulate their entrepreneurial dreams in a mesmerizing way To make people work hard for less or deferred compensation These include: Describing new, unclear concepts Telling stories about the future Mesmerizing with near-hypnotic effect 2. Successful entrepreneurs use media celebrity: To enhance the company's status and results; and To enhance the entrepreneur's status and wealth. How do they do this differently than managers? 3. What is celebrity status’s impact on various business relationships: Financing? Customers? Suppliers? Operating Results? 4. What is the difference between: Private PR vs. Public PR? 5. How do entrepreneurs do market research differently than non entrepreneur managers? 6. How do entrepreneurs market with scarce funds? 7. What skill sets are required and how does one develop them? B. Syllabus Read the following (in the Case Packet): • Sahlman, William A. "Dr. John's Products, Ltd." Harvard Business School. Case N9-803-063, Oct. 8, 2002. pp. 1-22. • Gurley, J. William. “The Great Art of Storytelling.” Fortune. Nov. 8, 1999. pp. 300 and 304. • McKee, Robert. “Storytelling That Moves People.” Harvard Business Review. Jun. 2003. pp. 51-55. • Denning, Stephen. “Telling Tales.” Harvard Business Review. May 2004. pp. 122-129. • Karlgaard, Rich. “How to Give Great Speeches.” Forbes, Dec. 10, 2007, Vol. 180, Issue 12, p. 37. •

Whyte, David. “A Larger Language for Leadership.” (Interview on Conversational Leadership) Harvard Business Review, May 2007.

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Topic VI

Being Resourceful, Financing Techniques [Summary of Preceding Session(s)]

A. Outline 1. Financing a. Initial Financing i. Types of Financing a. Self (Equity & Borrowed) b. Family & Friends c. Vendors & Customers d. Angels (various halo sizes?) ii. Venture Capital, Venture Leasing. a. Whether, When or How to Structure, Anticipate, Estimate, Present, Develop, Negotiate and Close, including Style, Timing, Traps, Opportunities, etc. b. Request coaching & guidance -- How, Why, When? b. Subsequent Financing i. Primary a. Sources i) Same ii) Other iii) IPOs ii. Secondary a. Whether b. Why c. When c. How c. Vengeance is Longer than Memory i. What are the Successful Entrepreneur's obligations to investors? ii. Consider IdeaLab and Bill Gross (see syllabus). d. Control i. 51% and other Myths about Stock Ownership, Control & Survival ii. Use of Financial Statements, Pro Formas and Projections a. There will be a brief discussion about Business Plans and other presentation tools, focusing on goals; demonstrating perceptive modeling vs. revealing confusion, indecisiveness, inflexibility and wrong decisions; sizing up an audience; adaptability; style; etc. However this course does not deal with the structure and preparation of business plans such as is covered in "Entrepreneurship/New Venture," Professor Barry Merkin's invaluable course. b. There will be a brief discussion about which financing sources to use when, how they can help or hurt your goal, etc. However this does not deal with the detailed aspects such as are covered in "Entrepreneurial Finance," Professor Steve Roger's invaluable course. B. Syllabus Read the following (in the Case Packet): ƒ “Prospectus Perspective” (in course packet under Topic III). ƒ Gunther, Merle. "They All Want a Piece of Bill Gross." Fortune. Nov. 11, 2002. pp. 1-4 [originally no. 230-234]. ƒ Manes, Stephen. "Smart Cart." Forbes. Nov. 25, 2002. pp. 1-2 [originally numbered 230-231]. ƒ Second Amended Complaint filed in California litigation “Kline Hawkes vs. Bill Gross.” filed in Los Angeles Superior Court on Jul. 29, 2002. pp. 1-49. ƒ Doebele, Justin. “Poison in Paradise.” Forbes. Apr. 3, 2000. pp. 1-3 [originally numbered 108-110]. ƒ Hira, Nadira A. “Idealab Reloaded: Ex-dot-com-wizard Bill Gross is back.” Fortune. Sept. 5, 2005. pp. 1-3 [originally numbered 143-146]. As to Idealab, consider the following: ƒ What should Bill Gross have done differently? ƒ Investors' Expectations--What is realistic and what is real? ƒ Is limited liability really limited? ƒ Is success a sufficient defense? ƒ "Show me the Money!” “Is that All There Is?" ƒ Does fear of failure end with failure? ƒ Ryan, Liz. “How to Slide Smoothly Into a Side Business.” Businessweek, Jan. 21, 2008, Issue 4067, p. SC08. ƒ Buckman, Rebecca. “VC’s New Math: Does Less = More!” The Wall Street Journal, Dec. 29, 2007. ƒ Gage, Jack. “Don’t Peek.” Forbes, Jan. 7, 2008, Vol. 181, Issue 1, p. 32. ƒ Kawasaki, Guy. “Garnering Angels (insights) (raising angel capital).” Entrepreneur, Jan. 2008, p. 48. ƒ Prystay, Cris. “With Loans, Poor South Asian Women Turn Entrepreneurial.” The Wall Street Journal, May 25, 2005.

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Topic VII

Not-for-Profits [Summary of Preceding Session(s)]

A. Outline 1. General a. What are not-for-profits? b. How does one entrepreneur a not-for-profit? 2. Charitable a. The Legitimate “Business” Purpose b. The Organization c. Structure & Filings d. Focused Preparation and Goals i. Measuring & Articulating Need, Achievability e. Credibility i. How to Obtain & Retain f. People g. Boards of Directors/Trustees i. Executive Committees h. Volunteers & Honorary Officers i. Staff j. Compensation & Other Motivations i. Promoter ii. Opportunities iii. Limitations [A] Effect on Volunteers [B] Effect on Contributor [C] Legal & Ethical k. Others 3. Quasi Business a. Examples b. The Organization structure & filings i. Structures and filings c. Focused Purposes and Goals i. Reasons for Using Not-For-Profit Structure ii. Inherent Sacrifices & Restrictions 4. Promoter’s Duration 5. Getting it done. a. How does entrepreneuring or not-for-profit differ from entrepreneuring a for-profit? b. What skill sets are needed? B. Syllabus Read the following (in the Case Packet) ƒ Rifkin, Glen. “Nonprofit Entrepreneurs: How WGBH Markets its Brands.” Strategy, Management & Competition. Third Quarter 1999. pp. 28-40. ƒ Ridgway, Nicole. “Fellow Travelers.” Forbes. Mar. 28, 2005. Vol. 175, Issue 6, pp. 1-2 [originally numbered 114 and 116]. ƒ Langreth, Robert. “For Ayra.” Forbes. Mar. 28, 2005. Vol. 175, Issue 6, pp. 1-3 [originally numbered 94-98]. ƒ Coolidge, Carrie. “Biting a Helping Hand.” Forbes, Oct. 3, 2005, p. 82. ƒ Westerbeke, William E. “An Illinois Not-For-Profit Directors’ Compliance Checklist.” Ill. Bar Journal, Vol. 94, September 2006, pp. 484-488. ƒ Barret, Victoria Murphy. "Doing Well, Doing Good." Forbes, Issue: 179.9, April 23, 2007, p. 56. 13

Topic VIII

The Right Thing—Ethics for Entrepreneurs [Summary of Preceding Session(s)]

A. Outline 1. Why deal with ethical questions in this course? In business school? At Kellogg? (And what do we hope to achieve?) 2. What ethics rules or standards are (or should be) applied differently to Successful Entrepreneurs? Consider: Sales of shares: per se? timing? Accounting: presentation? process? Layoffs Prejudice/Discrimination 3. To whom do Successful Entrepreneurs owe obligation ethically: Board of Directors? Community? Shareholders? Customers? Bankers? Suppliers? Professionals (Accountants, Lawyers)? Employees? 4. Have recent lapses in business ethics been experienced more so or as much in entrepreneurial businesses as in others? Why? 5. Crimes and Punishments: "What the Hell were they thinking?" 6. The Successful Entrepreneurs' ethics of prejudice, greed, and other vices. 7. Is it ever right to discriminate against people for their own good (and do entrepreneurs differ from managers on whether or how to do so)? 8. Can ethical obligations require or inspire unethical behavior B. Syllabus See Statement in II.B. Regarding Enron, Arthur Andersen and Comdisco Readings. Read the following (in the Case Packet): ƒ Useem, Jerry. “The Art of Lying: Can It Be A Good Thing?” Fortune. Dec. 20, 1999. pp. 278[A]-[D] and 278[F]-[G]. ƒ Conlin, Michelle & Zellner, Wendy. “The CEO Still Wears Wingtips.” BusinessWeek. Nov. 22, 1999. pp. 85, 86, 88 and 90. ƒ Sharpe, Rochelle. “As Leaders, Women Rule.” BusinessWeek. Nov. 20, 2000. pp. 75-84. ƒ Elkind, Peter. “The Hype is Big, Really Big, at Priceline.” Fortune. Sept. 6, 1999. pp. 193, 194, 196, 198, 200 and 202. ƒ Useem, Jerry. “New Ethics Or No Ethics.” Fortune. Mar. 20, 2000. pp. 82-86. ƒ Meyerson, Debra & Fletcher, Joyce K. “A Modest Manifesto for Shattering the Glass Ceiling.” Harvard Business Review. Jan. 2000. pp. 127-136. ƒ Brotman, Barbara. “Under Fire.” Chicago Tribune. Jan. 9, 2002. pp. 1-4. ƒ Humphreys, John. "The Best of Intentions." Harvard Business Review. Jul. 2002. pp 31-34, 36, 37, 40 and 42. ƒ Colvin, Geoffrey. “Ebbers May Be a Crook, But He’s No Con Man.” Fortune. Mar. 22, 2004. Vol. 149, Issue 6, p. 1 [originally numbered 74-75] ƒ Holmes, Stanley and Zellner, Wendy. “The Costco Way; Higher Wages Mean Higher Profits. But Try Telling Wall Street.” BusinessWeek. Apr. 12, 2004. Issue 3878, pp. 1-2 [originally numbered 76-77]. ƒ Lavengood, Lawrence G. “Doing Good While Doing Well In the Social Environment of Business.” Kellogg World. Winter 2003. p. 1-2 [originally numbered 25]. ƒ Stossel, John. “In Defense of Greed.” Forbes. Feb. 2, 2004. Vol. 172, Issue 15, p. 36. ƒ Colvin, Geoffrey. “History Repeats Itself at HealthSouth.” Fortune. May 12, 2003. p. 1 [originally no. 40]. ƒ Brady, Diane. “Hopping Aboard the Daddy Track; Suddenly, Achieving a Work-life Balance Isn’t Just a Women’s Issue.” BusinessWeek. Nov. 8, 2004. Issue 3907, p. 1-3 [originally numbered 100-102]. ƒ Gladwell, Malcolm. Blink: The Power of Thinking Without Thinking. 2005. pp. 110-117.

ƒ ƒ

Byrnes, Nanette. “Costco Starts a Barroom Brawl.” Businessweek, Dec. 31, 200, Issue 4065, p. 88. Liedtke, Michael. “Google Invests in Founders Wife’s Firm.” Chicago Tribune, May 23, 2007.

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Topic IX

New Thing [Summary of Preceding Session(s)]

A. Outline 1. What is the relevance of Speed? Market Share vs. Market Ownership Is first-to-market best? If so, for whom? Is “out-of-the-box” thinking now out of vogue? Should it be? 2. What’s better— a. Being the first to try the next new thing, or b. Positioning to serve the next new thing? 3. Are there new considerations regarding Compensation? What’s out? What’s In? 4. How have Mobility and the Attractive Track changed? 5. Is there a change in the Requisite Track Record? 6. Is there a difference between Substance and Promotion? 7. Is there a different meaning of Ethics? 8. What is the Impact of an IPO Goal? B. Syllabus Read the following (in the Case Packet): ƒ Takahashi, Dean. “Hatching a Better Incubator.” Red Herring. Dec. 18, 2000. pp. 88-92 and 94. ƒ Rigdon, Joan “The Second Mover Advantage: Why It Pays to Let Pioneers Make the Mistakes.” Red Herring. Sept. 2000. pp. 1-5 [originally numbered 462-470]. ƒ Champy, James. “Management Strategies Only a Few Sea Turtles Survive.” Forbes. Feb. 21, 2000. pp. 1-2 [originally numbered 96-97]. ƒ “Gut Feelings: Why Snap Decisions Work.” (Book Review) Businessweek, Aug. 20, 2007. ƒ Kawasaki, Guy “"Bring it on. (insights) (Wise Guy) (driving your company's competition to success)." Entrepreneur, Nov. 2007, p. 52. ƒ Hotz, Robert Lee. “Scientists Draw Link Between Morality And Brain's Wiring.” The Wall Street Journal, May 11, 2007, p. B.1. ƒ “KSR International v Teleflex Inc. et al.” Supreme Court, October Term 2006, pp. 1-7 and 1-24.

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Final Class

Overview of Course; Controlled Free-For-All

A. Overview of Course B. Guests: 1. Their Lessons 2. Cautions C. Your Entrepreneurial Business: 1. How can I help? 2. How can you help each other?

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